CW PROLIFERATION DEMARCHE: IRANIAN ORDER FOR

S E C R E T STATE 053501

E.O. 12958: DECL: X1, X5
TAGS: PARM PREL CH IR
SUBJECT: CW PROLIFERATION DEMARCHE: IRANIAN ORDER FOR
LARGE QUANTITY OF CHEMICAL EQUIPMENT FROM CHINA (S)

CLASSIFIED BY: EAP DAS DONALD W. KEYSER. REASON: 1.5(B,C,D)X1, X5


1. (S) BACKGROUND: DURING MISSILE NONPROLIFERATION TALKS ON
MARCH 6 IN WASHINGTON, CHINA'S MFA ARMS CONTROL AND
DISARMAMENT DIRECTOR GENERAL LIU JIEYI TOLD NP A/S WOLF THAT
CHINA WAS TAKING SEVERAL, SIGNIFICANT NEW STEPS TO TIGHTEN
CHINA'S NUCLEAR, CHEMICAL, AND BIOLOGICAL EXPORT REGULATIONS,
INCLUDING HAVING INTERIM CONTROLS COVERING ALL ITEMS ON THE
AUSTRALIA GROUP (AG) CONTROL LIST IN PLACE BY THE END OF
MARCH.


2. (S) THIS IS WELCOME ACTION THAT WE WANT TO ENCOURAGE. WE
ALSO WANT TO UNDERSCORE THE NEED FOR EFFECTIVE ENFORCEMENT OF
THESE CONTROLS, AND RAISE OUR CONCERNS ABOUT IRANIAN ENTITIES
SEEKING DUAL-USE CHEMICAL EQUIPMENT FROM CHINA. IN
PARTICULAR, INFORMATION EXISTS THAT THE IRANIANS HAVE
APPROACHED TWO CHINESE FIRMS -- ZIBO CHEMET EQUIPMENT PLANT,
ALSO KNOWN AS ZIBO CHEMICAL EQUIPMENT PLANT (ZCEP),AND
LIAOYANG PHARMACEUTICAL MACHINERY IMPORT AND EXPORT (LPMIE)
-- FOR LARGE QUANTITIES OF DUAL-USE CHEMICAL EQUIPMENT. WE
WANT CHINA TO INVESTIGATE THIS CASE AND TAKE STEPS TO PREVENT
THE TRANSFER.


2. (C) ACTION REQUEST: DEPARTMENT REQUESTS POST CONVEY THE
POINTS IN PARA 3 TO THE APPROPRIATE HOST GOVERNMENT
OFFICIALS.


3. (S - REL CHINA) BEGIN TALKING POINTS.
-- WE LOOK FORWARD TO YOUR GOVERNMENT'S PUBLICATION AND
ENFORCEMENT OF AN INTERIM MEASURE CONTROLLING ALL ITEMS
LISTED IN THE AUSTRALIA GROUP LISTS. THESE MEASURES WILL
HELP PREVENT THE SPREAD OF WEAPONS OF MASS DESTRUCTION THAT
POSE A THREAT TO THE CITIZENS OF OUR TWO COUNTRIES.

-- WE ARE ESPECIALLY CONCERNED ABOUT THE DEVELOPMENT OF
CHEMICAL WEAPONS AND OTHER WEAPONS OF MASS DESTRUCTION BY
STATE SPONSORS OF TERRORISM SUCH AS IRAN.

-- IRAN HAS ACKNOWLEDGED ITS PAST DEVELOPMENT OF CHEMICAL
WEAPONS. IRAN ALSO HAS CONTINUED ITS EFFORTS TO SEEK
DUAL-USE PRODUCTION TECHNOLOGY, EXPERTISE, AND PRECURSOR
CHEMICALS FROM CHINESE ENTITIES. THIS ASSISTANCE COULD BE
USED TO CREATE A MORE ADVANCED AND SELF-SUFFICIENT CHEMICAL
WARFARE INFRASTRUCTURE.

-- IN PARTICULAR, WE HAVE INFORMATION THAT IRAN IS SEEKING TO
PROCURE LARGE QUANTITIES OF AUSTRALIA GROUP-CONTROLLED,
DUAL-USE CHEMICAL EQUIPMENT FROM CHINESE COMPANIES.
SPECIFICALLY, IRANIAN FIRMS HAVE APPROACHED THE CHINESE FIRM
ZIBO CHEMET EQUIPMENT PLANT -- ALSO KNOWN AS ZIBO CHEMICAL
EQUIPMENT PLANT (ZCEP) -- AND LIAOYANG PHARMACEUTICAL
MACHINERY IMPORT AND EXPORT (LPMIE). WE BELIEVE THAT IRAN
HAS ACTED THROUGH LPMIE'S SALES REPRESENTATIVE IN IRAN, ARYA
FOREIGN TRADE CORPORATION.

-- THE FACT THAT IRAN IS SEEKING SUCH A LARGE QUANTITY OF
GLASS-LINED CHEMICAL PROCESSING EQUIPMENT RAISES SERIOUS
CONCERNS THAT THE EQUIPMENT IS NOT FOR LEGITIMATE PURPOSES,
BUT IN FACT WILL BE DIVERTED TO IRAN'S OFFENSIVE CHEMICAL
WEAPONS PROGRAM.

-- WE URGE CHINA TO INVESTIGATE THIS MATTER AND TAKE ALL
NECESSARY STEPS TO STOP THIS TRANSACTION FROM OCCURRING AND
PREVENT CHINESE ENTITIES FROM CONTRIBUTING EVEN INADVERTENTLY
TO IRAN'S CHEMICAL WEAPONS PROGRAM. AS A STATE PARTY TO THE
CHEMICAL WEAPONS CONVENTION, CHINA HAS AN INTERNATIONAL LEGAL
OBLIGATION NOT TO ASSIST ANYONE, IN ANY WAY, IN CHEMICAL
WEAPONS ACTIVITIES.

-- WE LOOK FORWARD TO HEARING THE RESULTS OF YOUR
INVESTIGATION.
END POINTS.


4. (C) PLEASE SLUG REPLIES FOR NP/CBM, EAP/CM, AND INR/SPM.
POWELL